Walmart Starts Using Payroll Advances

A growing number of companies are helping workers gain access to payroll advances and loans, reflecting concern over the impact money problems are having on productivity levels and worker retention.

Employers, including Walmart Inc., have recently added these services. The aim is to help cash-strapped employees, many with damaged credit, cover unexpected expenses without resorting to high-cost debt.

“Employers have woken up to the fact that a majority of workers are having a lot of trouble simply getting by, never mind getting ahead,” said Sophie Raseman, head of financial solutions at Brightside, a company Comcast Corp. co-founded that provides financial guidance to workers and is testing payroll loans with some corporate clients.

Workers typically access the services online. The payroll-advance programs generally give employees the option to accelerate a portion of their next paycheck for a fee that often amounts to a few dollars. The loans are typically a couple thousand dollars, and are repaid through automatic payroll deductions over a few months to a year or longer. Approval and interest rates, generally 6% to 36%, often depend on factors including a borrower’s credit score.

Because the services deduct repayments from workers’ paychecks before the money goes to their bank accounts, default rates tend to be low.

According to an Employee Benefit Research Institute survey of 250 employers last year, 12% offer accelerated pay. The same percentage offer short-term loans repaid through payroll deductions. Another 4% and 6% plan to add the services, respectively.

Companies, meanwhile, are responding to data that indicate American workers are financially stressed. While incomes have been stagnant for many, expenses for items including health care and education have risen.

Employers are concerned about the impact on productivity and turnover. Research by Todd Baker, a senior fellow at Columbia University’s Richman Center for Business, Law and Public Policy, looked at 16 companies in the U.K. that offered payroll loans and found that borrowers had, on average, an annualized attrition rate 28% lower than the rate for all employees.

Mary Haynes, chief executive of Nazareth Home, which runs long-term-care facilities in Louisville, KY, said the company began offering accelerated paychecks through PayActiv Inc. two years ago after realizing many of its staff were incurring late fees and using payday loans. PayActiv works with 500 employers, including Walmart.

Of Nazareth’s 400 employees, 338 are enrolled in PayActiv and 280 use it regularly, Ms. Haynes said.

The benefit attracts workers and saves Nazareth money, Ms. Haynes said, by “practically eliminating” its use of a staffing agency some workers preferred because the agency provided access to paycheck advances.

Typically, payday loans charge $15 for every $100 borrowed. Bank overdraft fees often cost about $35. In contrast, PayActiv charges $5 per pay period when an employee uses the service, which also includes financial counseling and online bill payments.

Some point out that a $5 fee can equate to a high annualized percentage rate on a small short-term loan.

Robyn McGuffin, a medication technician at Nazareth Home, says PayActiv has helped her avoid late and overdraft fees of as much as $80 a month.

Ms. McGuffin, 36 years old, says she typically uses PayActiv once or twice per pay period, generally for bills due before her next paycheck arrives. The Louisville resident also used it to buy a new car battery and cover her fiancé’s share of the household expenses when he was temporarily out of work due to a medical emergency.

Some employers pair loans or accelerated paychecks with online tools to help workers budget, reduce debt and amass emergency savings.

Walmart introduced salary advances in late 2017. It has seen employees rely less on payday loans and bank overdrafts, said David Hoke, who oversees health and well-being.

Employees pay $6 a month to use PayActiv. It is embedded in an app called Even, which also includes a budgeting service that nudges users to save surpluses. Walmart covers the cost for one month per quarter and caps the amount workers can accelerate at 50% of pay. Of the company’s 1.4 million workers, 380,000 are frequent app users, Mr. Hoke said.

For those in need of larger sums, some employers offer loan services that typically advance as much as $5,000, with repayments deducted from workers’ paychecks over four months to a couple years.

Lender Kashable approves “more than 60%” of applicants, said co-CEO Einat Steklov. It considers factors including job tenure and credit scores.

The average user has a subprime credit score and pays an annual interest rate of about 20%, Ms. Steklov said. Kashable’s default rate is 5%. Borrowers who leave their jobs before repaying in full generally switch to automated bank transfers.

Learn more about how Agency Workforce Management can integrate with advanced pay software by reading our ebook.

Fair Scheduling Trend Could Spell Trouble for Providers

Fair Scheduling Trend Could Spell Trouble for Providers

In recent months and years, retention and rising payroll costs have been a major concern for providers. However, fair scheduling legislation is gaining steam in cities and states across the country, and could soon be an equal issue — potentially making matters more complex.

Fair scheduling legislation varies across the country, but generally, the rules mandate employees must receive:

  • Set work schedules a certain number of days in advance
  • A certain number of rest hours in between shifts

If employers don’t meet requirements, they must pay workers a premium rate. This stipulation could be very difficult for providers to manage in HCBS programs where clients set their own schedule, or in group homes where staff call off at the last minute and a replacement has to provided

In California, workers who earn the minimum wage per hour are entitled to additional pay known as a “split shift premium” when their schedule includes a split shift. The premium is equal to one hour of pay at the rate of the minimum wage. An employee who is paid more than minimum wage may also be due a split shift premium, however, the greater the wage the lower the premium will be.

In some states and cities with fair scheduling laws, the rules only apply to certain industries, such as retail, hospitality, and food services. Some examples include the state of Oregon, along with the cities of San Francisco and Seattle. Vermont includes providers in fair scheduling laws.

In Chicago, a fair scheduling ordinance is being considered that casts a wide net. If passed, it would require employers to give their staff a written notice of their schedules two weeks in advance, and require workers at least 11 hours of time off between shifts. Schedule changes, or inability to meet these requirements, would require employers to pay workers premiums.

mySchedules includes software to comply with FAST (Fatigue Avoidance Scheduling Tool) developed by the US Army and deployed by the federal government. To learn more about mySchedules, download the fact sheet

Pennsylvania EVV Update

DHS recently published some more, but limited, information on EVV.

Which programs are impacted?

Providers serving participants in the OBRA waiver or Act 150 program must adhere to all timelines and guidance issued by DHS in order to comply with EVV requirements in the fee-for-service system. 

Few details available

The Department of Human Services (DHS) is moving forward with a “soft implementation” in September of 2019. DHS will provide more updates as DHS moves through this process. Providers using MITC as their own internal EVV system will be able to interface with the DHS EVV aggregator system but DHS has not yet issued implementation details. 

Pennsylvania has confirmed providers will be able to use their own EVV system and submit information to the state’s EVV vendor. The Department of Human Services is using the existing PROMISe™ fiscal agent contract with DXC for EVV.

This “open” route is the one most states are taking as providers need the flexibility to use a system that best fits their business model to benefit from the potential productivity and billing gains from EVV. Smaller providers or providers with straightforward needs may find they can use the Department’s EVV system for compliance. However based on provider experience in other states, state systems tend to be limited and cause more work.

Many Pennsylvania providers are already using Agency Workforce Management for EVV. For more information on myAttendance for EVV/HIPAA compliance, download the fact sheet below.

U.S. Department of Labor - Managing FMLA

New DOL Guidelines for Vocational Programs

Wage and Hour Updated Guidance for 14(c) Certificate Holders

The U.S. Department of Labor’s Wage and Hour Division (WHD) has published three documents providing guidance on the payment of subminimum wages under section 14(c) of the Fair Labor Standards Act (FLSA). The first two are related to the impact of Rehabilitation Act section 511 and the third provides general guidance on the administration of section 14(c).

Field Assistance Bulletin (FAB) No. 2019-1 concerns the definition of subminimum wages under section 511 and WHD’s enforcement of the limitations on the payment of those wages under section 14(c).  Fact Sheet #39H: The Workforce Innovation and Opportunity Act and Limitations on Payment of Subminimum Wages under Section 14(c) of the Fair Labor Standards Act. The revisions include information on the definition of subminimum wages and timing requirements under section 511, as well as two charts to provide visual summaries for determining when and to whom the specific section 511 requirements apply. 

The fact sheet also cross-references readers to the related regulations issued by the U.S. Department of Education. Fact Sheet #39I:  Adjusting Commensurate Wage Rates under a Section 14(c) Certificate After a Change in the Minimum Wage, provides guidance on taking appropriate action to ensure prevailing wage rates are timely examined and adjusted, and the workers’ commensurate wage rates correspondingly adjusted, as needed, when there is an increase in the federal, state, or a locality’s minimum wage requirements.

Download the fact sheet for more information on how myClients can help providers managing day and vocational programs.